You should be using the Outlook Address Book, not the Personal Address Book.
Go to Tools > E-mail accounts > View or change existing directories or
address books. Remove the Personal Address Book. Then back up to the
preceding screen which allows you to add a _new_ directory or address book
and add the Outlook Address Book. Then click on Change. to make sure the
Contacts folder(s) you want to display are listed. You may need to enable
the Contacts Folder as an e-mail address book by R clicking the Folder >
Properties and check the "Show this folder as an E-mail address book" box.
Make sure you restart Outlook after making these changes.